By Guest Blogger, Michael Campbell, Local Valuers Australia
Next Level Wealth
One of the questions we are often asked is how property valuations work and what every buyer and seller should know. There are several key factors to consider when looking at a property: location, recent sales, and market conditions.
Firstly, location is crucial. You've probably heard the phrase "location, location, location." When conducting a valuation report for non-lending purposes, we focus on recent sales in the area. We typically examine around 30 to 50 sites and include 3 to 20 comparable sites in our report. This helps us provide a comprehensive view of the property's value based on similar properties in the vicinity.
Market conditions are also important. Interest rates, for example, affect everyone in Australia. We consider these factors when conducting valuations. One key method we use is the direct comparison approach, which involves inspecting recent sales in the area. We look at the underlying land value, the property's position within the suburb, orientation (e.g., north-facing), views, and proximity to amenities like shops, parks, and transport links. This method ensures that we account for all relevant factors that could influence the property's value.
A valuation report provides an exact dollar figure, unlike an appraisal, which gives a range (low, high). Our reports are signed off by a certified registered valuer, with the API or AVI RICS number included. This certification ensures that the valuation is conducted by a qualified professional and adheres to industry standards.
Research is key in our valuation process. We compare similar properties (e.g., residential with residential) and consider recent sales to arrive at our valuation. For commercial properties, we look at commercial and industrial zonings. This approach ensures that we are comparing apples to apples and not apples to oranges, which is crucial for an accurate valuation.
Understanding the purpose of the valuation is crucial. We conduct various types of valuations, including for capital gains tax, self-managed super funds, stamp duty, related party transfers, pre-sale and pre-purchase advice, mediation, family law, insolvency, and development sites. Development site valuations take longer and are prepared for specific client needs, often requiring expert witnesses for litigation and family law court matters. These specialized valuations require a deep understanding of the specific requirements and regulations involved.
During inspections, our senior valuers arrive early, take photographs, measurements, and draw an outline of the property. This thorough inspection process helps us gather all necessary information to provide an accurate valuation. While we prefer on-site inspections for a clearer picture, we can also conduct desktop valuations when appropriate, leveraging our networks and data from property experts. Desktop valuations involve more research and often include consultations with real estate agents and buyers' advocates to gather additional insights.
Superfund valuations are common for us. Auditors now prefer certified valuation reports over market appraisals from agents. These reports often include rental figures, which auditors also prefer. Providing rental figures helps give a more comprehensive view of the property's potential income, which is important for superfund valuations.
At Local Valuers, we emphasize quality assurance, regulations, and compliance. Our valuers are licensed and registered with governing bodies like API, AVI, and RICs. This ensures that our valuations meet the highest standards of accuracy and reliability. We also stay updated with the latest industry trends and regulations to ensure our valuations are current and relevant.
In addition to the technical aspects of property valuation, we also consider the broader market trends and economic factors that could impact property values. For example, changes in government policies, economic conditions, and demographic trends can all influence property values. By staying informed about these factors, we can provide more accurate and insightful valuations.
Another important aspect of property valuation is understanding the specific needs and goals of our clients. Whether it's for a sale, purchase, investment, or legal matter, we tailor our valuations to meet the unique requirements of each client. This personalized approach ensures that our clients receive the most relevant and useful information for their specific situation.
In summary, property valuation is a complex process that involves a thorough analysis of various factors, including location, recent sales, market conditions, and specific client needs. By conducting detailed research, inspections, and comparisons, we provide accurate and reliable valuations that help our clients make informed decisions. Whether it's for a residential property, commercial property, or development site, our team of experienced valuers is committed to delivering high-quality valuation reports that meet the highest industry standards.
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